TaxTMI 
TaxTMI 
2025 (5) TMI 2108
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.... Sanjay Kumar, Superintendent (AR) appeared for the Appellant Shri Vikas Mehta, Consultant appeared for the Respondent ORDER The brief facts of the case are that an intelligence was received which indicated that some importers were importing Superior Kerosene Oil (SKO) in the guise of "Industrial Composite Mixture Plus" ("ICMP") or "Low Aromatic White Spirit" ("LAWS") under CTH 27101990, in violation of the Policy provisions, an inquiry was initiated by the Revenue and it's officers visited office premises of M/s. Shree Sanari Shipping, Gandhidham and MAT Shipping. Gandhidham and retrieved copies of the documents/emails, printouts of WhatsApp chat of Shri Virbhadra Rao with Shri Mritunjay Dasgupta under panchanama date 29.08.2018. From the above searches, it came to the notice that some importers were engaged in importing ICMP/ LAWS, declared as 'Industrial Composite Mixture Plus. The department forwarded representative samples to CRCL, Delhi to ascertain correct description of the goods. which after testing all samples drawn, opined that these samples meet the requirements of SKO (Kerosene) as per IS: 1459:1974. The test reports confirmed that the goods imported by Va....
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....of the provisions and imposition of fine and penalty, which are confirmed by the Adjudicating Authority as detailed below:- 1. SCN No. DRI/AZU/GRU/SKO-JMCI/INT-09/20/2018 dated 28.03.2019 OIO No. KDL/ADC/AK/15/2019-20 dated 19.09.2019 OIA No. KDL-CUSTM-000-APP-07 to 14-20-21 dtd. 23.07.2020 Value of the Goods - Rs. 3,29,50,412/- Main Noticee Fine Penalty under Section 112 Penalty under Section 114AA Penalty under Section 117 M/s. Jai Mata Chintpurni Impex 30,00,000 8,00,000 4,00,000 75,000 Co-Noticees Shri Virbhadra Rao Illa, Proprietor of M/s. Shree Sanari Shipping 8,00,000 4,00,000 Shri Iqbal Rahman Shaikh, Representative of M/s. Shree Sanari Shipping 4,00,000 2,00,000 Shri Mritunjay Dasgupta (Customs Broker), Proprietor of M/s. MAT Shipping 8,00,000 4,00,000 Shri R.P. Meena, Chemical Examiner Gr-I, Custom House Laboratory Kandla 8,00,000 4,00,000 Shri Ankit Tandon of M/s. Millennium Lubricant FZE, UAE 8,00,000 4,00,000 M/s. Millennium Lubri....
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....ADC/AK/16/2019-20 dated 20.09.2019 OIA No. KDL-CUSTM-000-APP-28 to 33-20-21 dtd. 24.07.2020 Value of the Goods - Rs. 1,66,95,237/- Main Noticee Fine Penalty under 112 Penalty under 114AA Penalty under 117 M/s. Jan Priya Energy 15,00,000 4,00,000 2,00,000 50,000 Co-Noticee Shri Virbhadra Rao Illa, Proprietor of M/s. Shree Sanari Shipping 4,00,000 2,00,000 Shri Iqbal Rahman Shaikh, Representative of M/s. Shree Sanari Shipping 2,00,000 1,00,000 Shri Mritunjay Dasgupta (Customs Broker), Proprietor of M/s. MAT Shipping 4,00,000 2,00,000 Shri R.P. Meena, Chemical Examiner Gr- I, Custom House Laboratory Kandla 4,00,000 2,00,000 M/s. Sunrise Petroleum FZC, Sharjah 4,00,000 2,00,000 M/s. Yes Corporation 4,00,000 2,00,000 5. SCN No. DRI/AZU/GRU-3/SKO-V.V Ent/INT-09/2018 dated 26.03.2019 OIO No. KDL/ADC/AK/17/2019-20 dated 26.09.2019 OIA No. KDL-CUSTM-000-APP-15 to....
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....0 M/s. Kan Trading FZE, United Arab Emirates 8,55,000 4,27,500 1.3 The adjudicating authority observed that as per the provisions of section 46(4) ibid and 46(A) of the Customs Act, 1962, the importer while presenting a B/E shall make and subscribe to a declaration as to the truth of the contents and shall in support of such declaration, produce the invoice, if any or any other documents relating to the imported goods; the importer, shall ensure accuracy and completeness of the information given, the authenticity and validity of any document supporting it and compliance with the restriction or prohibition. He held that the importers failed to provide accurate and complete information about the goods and have imported SKO in the guise of ICMP with wrong classification thereof under CTH 27101990. Therefore, he confiscated the said imported goods under section 111(d), 111(m) and 111(p) ibid and imposed Redemption fine in lieu of confiscation. The adjudicating Authority also imposed penalty on the Noticees for their respective roles. 1.4 The appellants filed appeals against the OIOs before the Commissioner (Appeals), Ahmedabad. The departmen....
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.... seen that out of 8 parameters on which the sample has to be tested for determining whether or not the same meets with the specifications of Kerosene, it is seen from both the test results that test have not been undertaken with respect to the following 3 parameters.: (i) Burning quality (a) Char value, mg/kg of oil consumed, Max (b)Bloom on glass chimney (ii) Colour (Saybolt) (iii) Total, sulphur, percent by mass, Max It is also not the Revenue's case that the said three parameters can be established by any inferential process or otherwise. Insofar as sulphur is concerned, though no test have been undertaken, we will for the sake of our discussion assume that the said parameters have been met, as the same forms a part of the suppliers test reports and is within the parameters specified in IS 1459:1974 (reaffirmed in 1996). However in respect of the other two parameters regarding burning quality and colour there is absolutely no evidence that the revenue has produced to establish that the said two parameters are met with. The revenue has neither through test results nor otherwise lead any evidence to show that the said two param....
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.... "39. There cannot be any dispute to the proposition of law as noted by the High Court that the burden of proof as regards the classification of any goods of importation is upon the Revenue/Customs authority and the standard of proof in proceedings under the Tariff Act is not "beyond reasonable doubt". However, whether "preponderance of probability" can be the appropriate test for classification under the Customs Act would be required to be examined in the light of the "General Rules for the interpretation of this Schedule" as provided in the First Schedule - Import Tariff in Part 2 of the Tariff Act (hereinafter referred to as the "Rules") 40. The aforesaid Rules provide the principles on the basis of which the goods in the First Schedule to the Tariff Act are to be classified, which had escaped the attention of all the three forums below and each forum had adopted its own methodology to determine the proper classification of the goods/substance in issue as discussed above dehors the aforesaid rules for interpretation. 41. Rule 1 of the aforesaid Rules lays down that the classification shall be determined on the basis of the terms of the headings and relat....
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....on of specified ISI standards. 4.4 We also find that there is a complete silence in the report about the testing procedure adopted and whether they were in conformity of the ISI standards including the tests prescribed or not? In this regard, we take support from the decision of TATA Chemical Ltd Vs. Commissioner of Customs (Preventive), Jamnagar as reported in 2015 (320) ELT 45 (SC), which specifically dealt with sampling in testing procedure prescribed under ISI norms. We reproduce the relevant portion of para 16 and same reads as under: - "16. The admitted position on record is that the samples drawn were not drawn in accordance with law and were drawn with no regard whatsoever to IS 436. That IS 436 would apply to the facts of the present case is made clear by our judgment reported in Bombay Oil Industries (P) Ltd. v. Union of India, 1995 (77) E.L.T. 32 (S.C.), where this Court held following Union of India v. Delhi Cloth & General Mills Co. Ltd., 1963 Suppl. (1) SCR 586 = 1977 (1) E.L.T. (J 199) (S.C.), that if the method of testing of any item of Central Excise tariff is not mentioned, then the Indian Standard Institution's method should be applied. That this woul....
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....ng: - "Para 6. I have carefully gone through the appeal memorandum and the submissions made as well have requested for records of the case in respect of the appeals. The appellant's condonation of delay of about 17 days, which being with in allowable limits, is allowed. I find that the appellants had imported goods describing it as "Industrial Composite Mixture Plus", and classified them under CTH 27101990. The CRCL New Delhi in its Test Report No. C.No.35/Cus/2018-2019/CL-123 DRI dated 18/09/2018, reported as follows: "The sample is in the form of clear colorless liquid. It is composed of mineral hydrocarbon oil (more than 70% by weight) having following constants: Sl. No. Characteristics Requirement of Kerosene as per IS 1459-1974 Test result 1. Acidity, Inorganic Nil Nil 2. Distillation: A) Initial boiling point, degree C - 152 B) Percentage recovered below 200 degree C, Min. 20 84 C) Final boiling point, degree C. Max. 300 252 D) Dry Point, degree C - 250 3. Flash Point (Abel), degree C, Min 35 44 4. Smoke Point, mm, M....
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....s as per IS 1745-1978 in respect of Final Boiling Point. An officer may be deputed to collect the sealed remnant samples from CRCL, New Delhi." Hon'ble CESTAT has set aside OIA No.MUN-CUSTM-000-APP-80-81-19-20 dated 19.08.2019 after going through the test reports and have observed as under: "From a perusal of the test report of CRCL Delhi and CRCL Kandla, assuming the same to be correct, notwithstanding the difference in the test results between the two qua the parameter regarding final boiling point. It is seen that out of 8 parameters on which the sample has been tested for determining whether or not the same meets with the specifications of Kerosene, it is seen from both the test results that test have not been undertaken with respect to the following 3 parameters: (i) Burning quality (a) Char value, mg/kg of oil consumed, Max (b) Bloom on glass chimney (ii) Colour (Saybolt) (iii) Total, Sulphur, percent by mass, Max. It is also not the Revenue's case that the said three parameters can be established by any inferential process or otherwise. Insofar as Sulphur is concerned, though no test have been un....
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....report and will not discharge the burden of proof which is on the Revenue to decide the nature of the goods, as well as its classification, as the product is of scientific nature. This will also cast shadow of doubt on the conclusions if any reached or the opinions if any arrived at by the testing officials. Being inconclusive, the benefit of doubt must go to the party. The burden cannot therefore be considered as discharged by the department. We therefore find no infirmity in the order of the Commissioner (Appeals) and we find the same has been based on well-founded reasons and accept the same as legal and proper. Department has tried to build its edifice on the weak foundation of incomplete testing, without realising that "debile fundamentum fallit opus (a weak foundation makes the work fail)" will apply to the situation created. At this stage, after 6.5 years have lapsed and even remnant sample were used for testing, further, testing is neither feasible, nor can be conducted without causing prejudice to the respondents. 4.8 In view of the precedent decision with detailed reasons being available to us in the case of Swarna Oil Services (cited supra), we find that the Appeals o....